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Ford Canada Completes Auto ABS Deal

Ford Credit Canada completed securitizing nearly $600 million of auto loans in the company’s first public retail securitization.

Cantor Adds to London Lev Finance Team

Cantor Fitzgerald has expanded its leveraged finance group in London and could have as many as 10 leveraged finance professionals there by the end of the year.

Fitch-UK RMBS Servicing Evolves; Treating Customers Fairly

Fitch Ratings said that the servicing strategies of U.K. nonconforming lenders have developed rapidly since the onset of the recession, adding that these practices continue to evolve to reflect the changing economic environment.

CML Lowers its Forecast for U.K. Repossessions this Year

The U.K.'s Council of Mortgage Lenders released some updated forecasts on the U.K. economy for 2009.

Fovisste Debuts in RMBS

A gigantic RMBS priced today in Mexico, originated by the fund for government agency Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado.

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Articles

Euro Countries Take Measures to Address Crisis

While much of the focus has been placed on U.S. and U.K. government initiatives, Continental Europe has also made strides to implement measures to alleviate the economic pressures on the market. In Germany, a draft bill recently passed aims to help banks transfer structured securities, such as ABS and CDOs, to a government-backed unit on a voluntary basis. The government plan would allow private banks to offload troubled assets to a special-purpose vehicle, with a 10% reduction in their booking value. In return, the banks will receive a government-guaranteed bond amounting to the transfer value of those assets.

Ray of Light: Can the U.S. and U.K. Govts. Restart ABS?

At the start of 2009, the formula that would save securitization began with government intervention. Six months down the line, the U.S. and European markets have seen some results. For Europe, the story has naturally been fragmented or on a country-by-country basis where some governments pledging more support than others.

ABS Market Recovery a Question of Timing

The deadlock regarding securitization activity in Europe still persists. While pressure on credit markets eased significantly since March, ABS spreads did not follow suit! Given the rapid pace of spread tightening and sentiment changes in the credit universe during the last couple of months, the jackpot question this spring from a credit risk perspective regards timing: Will the credit crisis fade sooner than anticipated or do markets face another bull trap? And will the ABS market keep its outcast status or will there be a rehabilitation? Asset backed securities have been impacted more than any other sector by the crisis. Having been at the center of the storm, this market has changed significantly during the last two years. First of all, public placements have practically become non-existent: This is due to unattractive issuance spread levels (average 'AAA' RMBS spreads over 2009 were quoted in areas above 300 to 400 basis points) as well as a prevailing lack of investors, especially for lower parts of the capital structure. As banks hardly had realistic alternatives to relatively attractive central bank repo refinancing, a flood of repo transactions occurred (E912 billion ($1.25 billion) 2008-2009 year-to-date). However, outstanding ABS volumes which were retained for central bank repo windows have started to flatten out.

The European Central Bank's Repo Facility for ABS

As the turmoil in global financial markets continues to affect financial institutions around the world, it is increasingly evident that the asset repurchase facilities provided by central banks have become a lifeline for banks struggling to raise capital in the current climate. In a market devoid of its traditional investor base, originators and arrangers of securitization transactions within the Eurozone have come to rely heavily on the European Central Bank's (ECB) asset repurchase or 'repo' facility which allows (among other assets) ABS to be used as collateral for funding. In contrast to the various U.S. facilities designed to restart the U.S. securitization market, the ECB facility is intended to allow financial institution holders of ABS access to short-term finance at (until recently) attractive rates, and has led increasing numbers of originators to structure, issue and retain their 'own-name' ABS specifically for the purpose of accessing the ECB's repo facility. Unsurprisingly, originators have flocked to the ECB in droves with newly-issued ABS over the past two years as funding conditions have deteriorated, creating a de facto 'lender of first resort' position for the ECB within Europe. This heavy reliance on the ECB's repo facility has inevitably led to a gradual tightening over the past eighteen months of the criteria by which the ECB assesses the eligibility of assets submitted as repo collateral and, in particular, the criteria applicable to ABS as 'eligible assets'.

Securitization and the Global Economic Crisis

In the current pantomime of financial regulatory turmoil, the villain of the piece is easily cast - securitization. Even the relative obscurity of the word has added to its perceived villainy. A difficult word to pronounce for the uninitiated, it has been booed and hissed at by politicians of all sides. The Turner Review, published on March 18, firmly places securitization - at least in its more complex forms - at the heart of the current banking crisis. But does it deserve its reputation?

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